Centuria Office REIT Posts $18m Valuation Gain with Strong Leasing in FY25

A Resilient Office REIT in a Changing Market

Centuria Office REIT (ASX – COF), Australia's largest pure-play office REIT, has released its FY25 results showcasing a resilient performance amid evolving market dynamics. The REIT’s portfolio, valued at approximately $1.9 billion and spread across 19 Australian office assets, demonstrated strong fundamentals with occupancy holding firm at 91.2% and rental growth of 4.5% year-on-year.

Despite broader economic uncertainties, Centuria delivered Funds From Operations (FFO) of 11.8 cents per unit, aligning with prior guidance and underpinning a distribution yield of 7.7%. This steady income stream reflects the REIT’s focus on sustainable, quality returns supported by a diversified tenant base and active portfolio management.

Portfolio Valuation and Leasing Momentum

The second half of FY25 saw a $18 million like-for-like uplift in portfolio valuation, marking the first growth period since FY22. This positive revaluation was driven by rental growth and a stabilising weighted average capitalisation rate (WACR) of 6.89%, slightly higher than the previous year but reflective of market conditions.

Leasing activity remained robust with 24,406 square metres leased across 44 deals, representing nearly 9% of the portfolio’s net lettable area. Notably, the REIT achieved 100% office occupancy in Western Australia and South Australia assets, while maintaining occupancy well above the national metropolitan average of 82%. The weighted average lease expiry (WALE) stands at a healthy 4.1 years, providing income stability.

Capital Management and Debt Refinancing

Centuria’s capital management strategy continues to underpin its financial strength. The REIT refinanced its debt during FY25, extending maturities with no change to margins and maintaining gearing at 44%. The weighted average debt expiry now extends beyond FY28, providing ample headroom against covenants and flexibility to navigate interest rate volatility.

Interest cover ratios remain comfortable, and the REIT’s diversified lender base supports its proactive approach to liquidity and risk management. This prudent capital structure positions Centuria well to capitalise on future opportunities and withstand market headwinds.

Sustainability and Market Outlook

Centuria Office REIT is advancing its environmental, social, and governance (ESG) commitments, targeting zero scope 2 emissions by 2028 through renewable energy initiatives and portfolio electrification. Over half the portfolio is already electrified, including all Queensland assets, aligning with broader investor demand for sustainable real estate.

Looking ahead, the Australian office market faces constrained new supply due to high replacement costs and ongoing office withdrawals, particularly in Sydney. This supply limitation is expected to support rental growth and occupancy recovery. Centuria’s geographically diversified portfolio, with a strong presence in key metro markets, is well placed to benefit from these structural trends.

Guidance and Strategic Priorities for FY26

For FY26, Centuria Office REIT has provided guidance for FFO between 11.1 and 11.5 cents per unit and a distribution yield of 7.7%, payable quarterly. The REIT aims to maintain occupancy above the national average, capture rental growth where possible, and continue enhancing portfolio quality through selective asset allocation and leasing initiatives.

Capital management remains a priority, with ongoing focus on liquidity, covenant headroom, and managing interest rate exposure. The REIT also plans to further its sustainability agenda and explore higher and better use opportunities within its portfolio.